Firms sourcing sucralose from China are struggling to secure supplies owing to a combination of factors including rising demand as sugar prices rise, electricity shortages in southern China and tighter enforcement of environmental legislation, FoodNavigator-USA has learned.
In a note sent to customers this week, California-based botanical extracts distributor PhytoChem International Inc said it was now out of stock of the high intensity sweetener, although it expected normal deliveries to resume in July.
Sales and marketing manager Tom Winn added: “Our factory assures us that they will be resuming shipments in June for July but hasn't guaranteed how much they will be shipping.
“We are currently accepting orders for July delivery but we won't be able to guarantee delivery until we receive confirmation that the shipment is on the water. We also encourage our customers to place orders with longer lead times or blanket orders with estimated release.”
Factories have been ordered by the Chinese government to reduce hours
Smaller Chinese manufacturers using (more polluting, less efficient) first generation sucralose production technology were struggling the most, while larger manufacturers had the cash to invest in more efficient facilities that could be located in more rural areas where enforcement was also less strict, claimed Winn.
“The top four [sucralose] manufacturers [in China] have placed sucralose on allocation. Normally in a situation like this, smaller manufacturers fill in the gap. But in May this hasn't happened.
“No one is coming to the plate with economical sucralose.”
He added: “It's summertime in Southern China and there is an electricity shortage; factories have been ordered by the government to reduce hours. In addition sucralose production creates contamination and the government is tightening up on environmental regulations.”
Meanwhile, PhytoChem's Chinese sucralose supplier had raised its prices by 5%, "which we are forced to pass on”, he said.
PhytoChem International Inc owner Frank Li said the environmental controls in China had been in place for some time, but were now being much more strictly enforced, with more frequent inspections and fixed quotas for the amount of waste water factories are allowed to produce.
DNP International: Availability cannot match demand
Fellow California-based nutraceutical ingredients importer and supplier DNP International also warned customers about sucralose supply shortages in its May newsletter, adding: “DNP has been proactive to secure supply as much as possible.
"However, there is still a challenge; it will take about half a year or even longer to resume balance between demand and supply.”
A spokesman told FoodNavigator-USA this morning that rising demand for sucralose driven by higher sugar prices and a desire to replace aspartame was also creating challenges: "Global demand for sucralose is increasing a lot. Also, the sugar price keeps going up."
But he added: "DNP recently signed an exclusive agreement with a major manufacturer in China, and is trying its best to secure supplies for the American market. DNP is now among the few suppliers that can guarantee continuous supply and competitive pricing."
JK Sucralose: Supplies will become available in July
As for Chinese sucralose manufacturers themselves, Changzhou Niutang did not respond to emails from FoodNavigator-USA.
However, JK Sucralose confirmed that there had been shortages.
Global marketing director Hongmei Yang said: “For the time being JK has a bit of a shortage but we will be totally released from July in terms of capacity.
“The environmental problem is one of the major reasons [for recent shortages]. Meanwhile the Chinese government also controls the electricity supply."
Yang added: “[But] one of the most important reasons [that some sucralose manufacturers cannot meet demand], is that these companies have not updated to new technology [when expanding sucralose production]. The cost is very high with their old technology.”
However, JK has “all the environment treatment facilities in place” and “totally meets China’s national environmental regulations”, claimed Yang.
“JK will have 120 tons a month of sucralose in available capacity from July and 1,500 tons per year.”
How much will Tate & Lyle benefit?
Tate & Lyle, which has a sucralose plant in Singapore and recently re-opened its original sucralose facility in McIntosh, Alabama , did not respond to requests for comment.
However, industry sources told FoodNavigator-USA that while manufacturers could buy sucralose from Tate & Lyle while Chinese producers resolved their production issues, Tate & Lyle charged “30-40% more” than Chinese rivals for small orders, although it was more competitive on larger ones.
L-Leucine price is ‘skyrocketing’
Several other ingredients have also been affected by the stricter enforcement of pollution controls and power shortages in China, said DNP Ingredients, which warned customers to “plan supply for Q2 and Q3 in order to avoid shortages”.
The price of amino acid L-Leucine, for example, “is skyrocketing now due to the availability being limited”, said DNP.
“The Chinese government controls pollution now more than ever, so the manufacturers have to decrease their output to reduce the impact on the environment.”
Click here to read about competition in the sucralose market.
Click here to see a picture gallery of Tate & Lyle’s recently-reopened sucralose factory in Alabama.
Click here to read about the evolving sucralose market.
Click here to read about Tate & Lyle’s production process for sucralose.